Video 3:32
SA assesses impact of resource tax

Stateline SA's Smion Royal reports on the state of local mining projects as the resources sector attempts to assess the impacts of the Federal Government's proposed mining tax.

Transcript

IAN HENSCHKE, PRESENTER: Now yesterday Santos held its annual general meeting at the festival centre and it couldn't have come at a more interesting time with the mining industry being in uproar over the proposed new tax on super profits. Now in a moment we'll hear from the head of Santos, but first Simon Royal has been looking at some of the possible effects on the local industry.

SIMON ROYAL, REPORTER: According to the Federal Government its new tax is about all Australians sharing the mining bonanza through higher superannuation. It says skyrocketing prices have created super profits and a lot of those have flowed overseas.

WAYNE SWAN, TREASURER: Our resources belong to all Australians and Australians do deserve a fair share.

SIMON ROYAL: But the mining industry was quick to dig in. While no one Stateline spoke to is exactly sure how the tax will work, they do say it could cause serious problems for projects in South Australia.

The South Australian Chamber of Mines and Energy says even though many projects here are small or medium sized, they will still be affected.

This is Terramins Angus mine at Strathalbyn. It's been producing zinc since 2008 from an ore body the company expects to run out in about 2014. There are hopes to extend the life but the company says the new super profits tax has put those in doubt.

KEVIN MORIARTY, CHAIRMAN, TERRAMIN: What I'm more concerned about is what effect it will have on the mine life of Angus. As it stands at the moment it doesn't appear that we will have much incentive to extend the life of the mine.

KEVIN MORIARTY: We like to point out we have a majority of South Australian shareholders because this company was formed here and is very much focussed here.

And I think it's a bit sad that we are effectively being discouraged from continuing investment here and basically being just from purely cash flow reasons encouraged to go off shore.

SIMON ROYAL: According to the Chamber of Mines and Energy, the five or six mines expected to open in the state over the next 12 months shouldn't be affected. But it says there are another eight projects still on the planning board that could be because investors will now be redoing their sums. It says unlike Queensland and Western Australia, a lot of South Australia's minerals are deep underground, which means larger upfront investment to get to them which is why it describes many of the projects here as marginal.

KEVIN MORIARTY: Quite a few projects are relatively marginal and quite a few are dependent upon their being a boom in the prices, a high price for the products. Coppers an example. If, however, or when I should say the price of copper for instance drops back to what I call long term levels, the projects gonna be even less viable.

SIMON ROYAL: But the Federal Government disagrees. And it's digging in too saying there's a lot of self interest at work here.